It’s obviously been a while since Oregonians passed Measures 66 and 67, ballot items that hiked taxes on the wealthiest among us and also increased the minimum tax that corporations must pay, to plug a part of a state budget gap and avoid other cutbacks. But the claim offered up by opponents of the measure—that the measures are driving rich people and their businesses out of the state—refuses to go quietly.
Usually, though, the claim is buttressed with anecdotal evidence—if that. Back in February, you might remember a KGW story that supposed such a migration. The story wasn’t right. It even came up earlier in February, during a Mercury-Oregon Bus Project Brewhaha with four state lawmakers. In a discussion on taxes, Democratic Representative Lew Frederick asked Republican Representative Patrick Sheehan to cite examples of jobs lost because of the measures. Sheehan couldn’t, off the top of his head, and later sent the Mercury printouts from some 2010 Oregonian and Portland Business Journal stories in which a small number of businesses fretted about the hikes.
Okay. But what does science say? (Besides that revenue from the measures didn’t come in as high as hoped.) NPR this morning featured a couple of studies that have attempted to actually quantify the issue. The gist, according to one of the study‘s authors?
There may be plenty of reasonable arguments for avoiding new taxes on the rich. You can argue that new taxes aren’t fair. You can argue that they affect investments in new businesses. But a mass exodus? So far, no one has proved it.
It turns out, according to the studies, people move for lots of other reasons—like jobs, or sun, or cheaper housing. Taxes don’t appear to be much of a driver on their own.
And what about the argument that the measures are also driving away businesses? A study released this month says Oregon’s actually among the most competitive states—No. 2—when it comes to corporate tax burdens.
Notes Scott Moore, spokesman for Our Oregon, the political outfit that pushed for the two tax measures: “That was the case before Measure 67, and it was the case after Measure 67.”
The “high taxes are making me move, ZOMG!1!1!” thing gets a lot of press, whereas the media never talks to people who are considering moving because the schools are cutting days/teachers/programs/etc.
Taxes themselves are just one part of what are considered “cost of living,” and every responsible person considering their options considers the cost of living somewhere.
Do they break out comparison tables of property, sales and income taxes? No.
But in the things they ordinarily see (e.g. average property taxes/home prices if they’re buying a home) like rent, utilities, gas, etc., those end prices reflect numerous tax policies, and I think it would be a mistake to think there’s no correlation between tax policies and people’s real life living decisions, when viewed that way.
Anyone who owns a small business, especially one that has employees, definitely sees a direct link between tax policies and their bottom line, as does any larger company, too.
With all that said, anyone who up and moves because of a particular tax or tax increase is just a dick, and the locale is better off without them anyway.
@dave, that’s a good point, and I’ve been wondering that as I walk around the Alberta area and see a surprising amount of houses for sale, especially when those are houses that obviously have young children. I wouldn’t think it was because of crime, so I wonder if the schools are playing a role in the decision to move (of course, the shitty economy is one obvious potential culprit).
I would argue the new PPS measures are – drastically high – tax increases, which really put a pinch on someone struggling to stay in their home.
The measures are anti-affordable housing.
I see this article and just think ‘here comes the support of the PPS bond…’
@Colin,
I have my doubts about that. Seems that most people that can afford to live near Alberta these days abhor the idea of sending their kids to the neighborhood public schools and opt for charter schools as it is.
Picking up and moving in of itself is very expensive if not impossible for some. A better question to businesses would be if you did not have to pay for the cost of moving, would you move to another state because of 66 and 67?
Both KGW’s and Mercury’s reports on the effect of these measures are asking the wrong questions.
What can’t be quantified is the amount of businesses and high income earners who DON”T move to Oregon because we have high taxes for higher end earners. Some states can get away with higher taxes like Hawaii. Oregon doesn’t exactly have the weather on its side.
Business lesson #1:
If you are a sole proprietor of a business, your stake in your business is taxed through personal income taxes (11%, soon to be lowering to +9%). There is this misunderstanding among the general population that all businesses are separated from individual incomes.
Taxes affect business decisions, but there are other things such as buildable land, access to local talent pool, location, location, location.
On the local level in Portland, one can see the negative consequence of Multnomah County Business Income Tax and Portland Business License Fee (1.45% + 2.20% of net income). This can add a lot of expense to a business, whereas going to Washington County, they pay a flat business fee a year.
There’s a reason why Washington has more Fortune 500 companies in its state than us. I love Oregon’s DIY culture, but we can’t keep having these negative business sentiments (from the local rag papers and denizens) and expect to have a decent economy.
I moved to Seattle, but then I’m a complete idiot.